So much for the first six months of 1996. Now, what's the prospect for the remainder of the year?

Curiously, many economists expect a slowdown.

"There are already some straws in the wind pointing to slower growth," Merill Lynch advised its clients recently. "After picking up during the first three months of 1996, loan growth has decelerated sharply during the past three months.

"Meanwhile, consumer debt is at a record-high level of 20.8 percent of income, credit-card delinquencies are rising and higher mortgage rates are beginning to affect the housing market," the brokerage firm said.

Landing became soft takeoff

Similarly, Smith Barney said, "We foresee moderating economic growth later this year and in 1997 and - as a result - believe interest rates should eventually decline."

If these predictions come true, the change will be a complete reversal of trends. For the first six months of 1996, all of the surprises have been on the upside.

Economic indicators - whether for jobs, sales or production - have been consistently better than expected.

Look back at the beginning of the year. Forecasters were almost unanimous in predicting a lackluster year. And stock market gurus were warning of a lukewarm equity market.

There was even talk that the economic soft landing being attempted by the Federal Reserve system would turn into a recession. That didn't happen. There was no recession, and the soft landing became the soft takeoff.

A series of interest-rate cuts by the Fed - two last year and one in January - stimulated economic activity to the point that some economists are worried that an outbreak of inflation waits just around the corner.

But - so far - inflation has been benign.

Speculation now focuses on whether the Fed will soon launch a preemptive strike against inflation this summer, increasing short-term rates just as it did in 1994.

The Fed's Open Market Committee meets next week and, as usual, experts are divided about whether it will increase rates.

Election playing a role

Politics cloud the issue.

"Inflation is rising, albeit slightly," economists at DRI/McGraw-Hill noted recently. "The Federal Reserve could respond and boost the short-term interest rates under its control by one-quarter or even one-half percentage point at its next meeting. Given the political sensitivity of such action, the Fed should then be prepared to wait until after the election to make another adjustment."

But that is "coulds" and "shoulds."

Accessing political risks to the Fed, these same DRI economists predict that the Fed won't change rates at all until after the election - possibly December.

If that happens, the predictions of the other economists will prove wrong. If short-term interest rates remain low, the economy will probably continue to improve in the second half of the year - although bond and mortgages rates could go higher.

So my bet is on continued low short-term rates, higher economic activity and profits, slightly higher long-term rates and perhaps a stable stock market until the November election.

But after the election - watch out.

If the economy continues strong, wages and prices will edge up. And this Fed has shown that it doesn't like even a mild uptick in inflation.

Sun-Sentinel columnist Jack Nease comments on business and economic issues affecting South Florida on Sunday, Tuesday and Thursday.